Learn to Plan, Plan to Learn: FINRA Arbitration Training

A Complimentary Webinar Co-Sponsored by NSCP
Thursday, November 5, 2020  |  Noon PT  |  3 pm ET

Many in the financial industry favor arbitration for the certainty it affords as well as the defined obligations, cost savings and streamlined process it provides. But these benefits can be forfeited due to lack of preparation, potentially exposing you and your clients to issues that could have been avoided.

Fox partners Josh Horn and Oksana Wright will lead a discussion on the following topics:

·    Pre-Arbitration Considerations

o  Selecting an arbitrator

o  Selecting a venue

o  Virtual hearing challenges

o  Pre-hearing conference prep

o  Approaches to discovery depending on type of case

o  Motions prep

·    Arbitration Considerations

o  What is admissible evidence?

o  Use of expert witnesses

·    Post-Arbitration Considerations

o  Responding to post-hearing submission requests and appeals

Please register here.

In our recent post, we have discussed the split in the federal appeals courts over whether a private international arbitration constitutes a “foreign or international tribunal” within the meaning of 28 U.S.C. § 1782(a), which authorizes U.S. district courts to provide assistance to foreign or international tribunals by ordering discovery of persons in the district.

On September 22, 2020, in Servotronics, Inc. v. Rolls-Royce PLC et al., No 19-1847, the U.S. Court of Appeals for the Seventh Circuit joined the Second and Fifth Circuits in holding that 28 USC § 1782(a) does not apply to private international arbitration.  As we have previously discussed, the Sixth and Fourth Circuits both recently ruled that section 1782 may be invoked to seek discovery in aid of private foreign or international commercial arbitrations.  Continue Reading The Seventh Circuit Joins the Second and Fifth Circuits in Holding That 28 USC § 1782(a) Does Not Apply to Private International Arbitration

Due to uncertainties created by the pandemic, virtual hearings will continue to remain the default option in particular in domestic, international and cross border proceedings, in which in-person appearances are made difficult by travel constraints.

There are many practical considerations that practitioners and clients face with regard to virtual hearings.  This post summarizes some important issues that need to be considered in advance of a remote hearing:

  • Technical aspects: There are various technical aspects that need to be planned in advance, including the platform for the hearing; presentation of electronic evidence; translations; recording and transcribing.  Most of these technical aspects are better left to the professionals, rather than the attorneys, who should be focusing on the legal aspects of the hearing.  For example, if the budget allows, there should be a designated person assigned whose responsibility is to ensure that the technical aspects of the hearing are running smoothly.  Such individual should be responsible, among other things, for presentation of electronic evidence, muting and unmuting of participants, setting up the break out rooms, and ensuring participants’ access to the hearing.

Continue Reading Virtual Reality Of Arbitration Hearings

Join virtually Sarah Biser, Robert Rubin, Mark Hess, James Perry, Micha Tollman and Roberto Hernandez-Garcia for a discussion regarding the use of Dispute Review Boards in domestic and international projects.  The Webinar will be broadcast live on September 17, 2020 at 11:00 eastern.  Kindly register at the link below.

Join virtually Sarah Biser and other international law practitioners for a discussion regarding the successful delivery of domestic and international construction projects at the 2020 Construction Webinar Series organized by the American Arbitration Association.   The Webinar will be broadcast live on September 15, 2020 at 11 am ET.  Kindly register at ADR.org.

Co-authored by Robert Rohrberger

Objectives and Considerations

The majority of international arbitrations are decided by three-member arbitration panels. Each party selects its “party-appointed” arbitrator, and the president or chair of the three-member panel is selected by the two party-appointed arbitrators, by a neutral authority or by other agreement of the parties.[1] This blog discusses some of the more critical considerations that a party and its attorney should review in the selection of its arbitrator. The importance of an in-depth review and analysis of an arbitrator’s background, experience and ability to work with her co-arbitrators cannot be overstated. Indeed, the selection of an arbitrator may be one of the most critical decisions a party makes.

Predisposition vs. Appearance of Bias

The ideal party-appointed arbitrator is a person who, because of her legal or cultural background, nationality, history and professional and technical experience is likely to be predisposed toward the selecting party’s side. To that end, prior professional positions and relationships, arbitration experience, including prior decisions, and academic writings should be scrutinized. However, a commonality of views with the appointing party cannot override her conscience and professional judgment, undermine her effectiveness and/or violate the governing arbitration rules regarding bias, independence and partiality. She should have not only stature, experience and gravitas, but the credibility to persuade her co-arbitrators of the strength of her party’s position.

The major international arbitration institutions have rules relating to bias, impartiality and/or independence. For example, the arbitration rules of the United Nations Commission on International Trade (UNCITRAL),[2] the London Court of International Arbitration (LCIA)[3] the International Arbitration Rules of the American Arbitration Association (AAA)[4] and the International Chamber of Commerce (ICC)[5] embody one or more of these concepts. There are requirements regarding the disclosure of bias, and there are provisions regarding the potential overruling of an arbitration award if bias can be demonstrated.

Both parties expect to pursue justice in an unbiased fashion. Even if the party-appointed arbitrator may be generally predisposed to the party personally or to its position, the other arbitrators should believe that the appointee will vote against the appointing party if required by the facts and/or law. Although an arbitrator may qualify as non-biased pursuant to relevant rules, a party should avoid selecting an arbitrator who will be perceived by the other arbitrators as biased in favor of the appointing party. A party-appointed arbitrator is expected to vote for the party with the better or more compelling arguments, law and facts, even though the arbitrator may be sympathetic to the appointing party because of a common nationality, shared background, culture or shared legal perspectives ― such as a common or civil law training, view about contract interpretation and summary disposition, and inclination regarding limited or more expansive discovery.

Experience as an Arbitrator

In most cases, it is best to select an individual with multiple experiences in international arbitration, or at least to avoid an individual who has never served as an arbitrator. The lack of experience can undermine confidence in the appointee during deliberations and in crafting an award, and limit the appointee’s effectiveness. Of course, there must be a first time for every arbitrator and there may be times when an individual’s other qualities are compelling enough for the appointing party to give the individual an opportunity, even if he or she lacks experience in arbitrations.

Knowledge/Stature in Field

For similar reasons, it is important to select a person who is knowledgeable or an expert in the area that is the focus of the arbitration and ideally enjoys a level of stature and respect. Knowledge is needed for the arbitrator to fully understand the issues and to participate in a meaningful way in deliberations and the drafting of the award. A reputation in the relevant area adds weight to any arguments that the arbitrator may present to the other arbitrators. For example, in a complex construction matter, many parties are likely to prefer to appoint an arbitrator with expertise not only in construction generally, but in the technical issues critical to the resolution of the dispute.

People Skills

A knowledgeable and experienced person will have little impact on their fellow arbitrators if they lack interpersonal skills or have off-putting personality traits. An arbitrator who is the greatest figure in his field will not be persuasive if he constantly announces himself as such. It is best to select a person who is confident and forceful, as well as collegial and capable of participating in a respectful, meaningful and persuasive discussion.

Availability

Checking the availability of a prospective candidate is a must. Selecting a highly skilled arbitrator who is too busy can be problematic. So it’s best to evaluate this issue and try to get an honest assessment of the arbitrator’s schedule in advance.

Sources of Information

The best source of information to be used in selecting an arbitrator is the appointing party’s or its lawyers’ personal experience with the individual. However, in many cases, the decision will be made in the absence of that direct personal knowledge. In these situations, the decision is usually based on a recommendation from a network of friends and professional connections or an evaluation of the individual’s CV and information that can be garnered from the internet and other public sources of information.

Some private vendors are attempting to develop more detailed, data-driven analytics to aid in a more objective assessment of arbitrators and their professional qualities. For each prospective arbitrator, these vendors obtain a variety of information relating to critical aspects of an arbitration(s) from participants. This data includes:

  • How the arbitrator under discussion administered the proceedings
  • How often the tribunals (on which the arbitrator sat) engaged in an early resolution of issues
  • How satisfied or dissatisfied the parties were with the award.

The vendors then create reports on each arbitrator candidate that include graphs and charts, as well as information regarding how to interpret the data.

Conclusion

A party-appointed arbitrator is selected with the hope that she will be able to persuade the other two arbitrators about the merits and truths of her client’s position. Remember that the opposing party has the same view about its arbitrator. A party-appointed arbitrator with stature, the requisite skills and experience will understand the importance of independence and the appearance of objectivity, which cannot be overstated. The checklist of arbitrator characteristics set forth above is not a guarantee that one’s position will prevail, but the list will help guide a party in the appointment of an arbitrator who can maintain that balance.

[1]           Each arbitral institution has its own rules about the selection of the presiding arbitrator if the parties cannot agree. Those rules are beyond the purview of this blog.

[2]           UNCITRAL Arbitration Rules, Articles 11 and 12.

[3]           LCIA Arbitration Rules, Articles 5, 10 and 11.

[4]           AAA International Rules, Articles 7 and 8.

[5]           ICC Arbitration Rules, Articles 11, 13, and 14.

In these series of posts, we discuss the differences that have emerged in rulings by federal appeals courts in the United States Circuits on certain issues that may affect the ability of a party in an international arbitration to obtain evidence from non-parties to the arbitration.

Arbitrator’s Power To Order Pre-Hearing Document Production Or Testimony From Non-Parties

In Part I of our post on the Circuit Courts split over discovery matters in international arbitration, we have discussed the Courts’ different views on whether a private international arbitration constitutes a “foreign or international tribunal” within the meaning of section 1782. The federal Courts of Appeals do not agree on another discovery matter that relates to obtaining evidence from non-parties in arbitration—including international arbitration—with the seat in the United States.  There is a Circuit split on whether an arbitrator may compel pre-hearing document production or testimony from non-parties pursuant to Section 7 of the Federal Arbitration Act (“FAA”), which applies to any arbitration in the United States involving interstate or international commerce.

The Second Circuit, Third Circuit (which includes Delaware, New Jersey, Pennsylvania), and Ninth Circuit (which includes Arizona, Alaska, California, and Hawaii) have ruled that an arbitrator does not have power to compel pre-hearing discovery of documents and testimony pursuant to the FAA, and can compel such discovery only for an arbitration hearing.

Continue Reading U.S. Circuit Courts Split Over Issues Concerning the Ability To Obtain Evidence From Non-Parties In International Arbitration, Part II

In these series of posts, we discuss the differences that have emerged in rulings by federal appeals courts in the United States Circuits on certain issues that may affect the ability of a party in an international arbitration to obtain evidence from non-parties to the arbitration.

 Application Pursuant 28 U.S.C. §1782

 A federal statute, 28 U.S.C. § 1782, states that U.S. district court may provide assistance to foreign or international tribunals by ordering discovery of persons in the district.  The Circuit Courts, however, disagree whether a private international arbitration constitutes a “foreign or international tribunal” within the meaning of section 1782.

In In re Application of Hanwei Guo for an Order to Take Discovery for Use in a Foreign Proceeding Pursuant to 28 U.S.C. § 1782, 965 F.3d 96 (2d Cir. July 8, 2020), the U.S. Court of Appeals for the Second Circuit reaffirmed its previous holding that a party cannot invoke 28 U.S.C. § 1782 to obtain documentary and testimonial evidence to be used in a private international commercial arbitration proceeding. Continue Reading U.S. Circuit Courts Split Over Issues Concerning the Ability To Obtain Evidence From Non-Parties In International Arbitration, Part I

Join virtually Oksana Wright and many other international law practitioners for a discussion of relevant international arbitration and litigation topics at the 12th Annual Conference on the Resolution of CIS Related Business Disputes organized by the ABA International Law Section and Russian Arbitration Association.  Oksana will be speaking on September 17 at the session entitled “Is the use of remote technology a new advantage for arbitration over litigation?”

You can register for free here. 

 

The London Court of Arbitration (LCIA) released 2020 update to its arbitration and mediation rules (the “Rules updates”), which comes into effect on October 1, 2020.  The purpose of the update is to “aim to make the arbitral and mediation processes even more streamlined and clear for arbitrators, mediators and parties alike.”

The Rules updates, among other things, address the increased use of virtual hearings and the primacy of electronic communication, which became more prominent in the Covid-19 era. Notable and substantive amendments to the Rules include:

Electronic Communications and Signatures

The Rules updates confirmed “the primacy of electronic communication with the LCIA and in the arbitration, as well as…the facilitation of electronically signed awards.”  Specifically, requests for arbitration must now be submitted electronically.  Otherwise, in accordance with Article 4, a prior written approval must be sought from the LCIA to submit the request for arbitration by any alternative method.  Same rule applies to the response and other applications, including for expedited proceedings, emergency arbitrators and expedited appointment of a replacement arbitrator.

The Rules updates now require that all communications be delivered by email or any other electronic means. Under appropriate circumstances, however, the LCIA may order written communications in the event a party is unable to receive electronic communications.

Article 26.2 also provides for electronically signed awards: “[u]nless the parties agree otherwise, or the Arbitral Tribunal or LCIA Court directs otherwise, any award may be signed electronically and/or in counterparts and assembled into a single instrument.”  This Rule may facilitate changes to legal practice, including enforcement of the foreign awards under the New York Convention, which requires a party seeking to enforce a foreign arbitral award to provide a duly authenticated original award or its certified copy.  It is not clear under the New York Convention, whether an electronically signed award will satisfy this requirement.

Virtual Hearings

Article 19.2 now specifically allows virtual hearings: “[a]s to form, a hearing may take place in person, or virtually by conference call, videoconference or using other communications technology with participants in one or more geographical places (or in a combined form).”

Tools Allowing Arbitrators To Expedite Proceedings

The Rules updates include new provisions that allow for more expedited proceedings under certain circumstances.  For example, new Article 9A allows, “[i]n the case of exceptional urgency,” any party to apply to the LCIA Court for the expedited formation of the Arbitral Tribunal.

Article 22.1(viii) provides the Arbitral Tribunal with power of early determination.  Specifically, the Arbitral Tribunal has power “to determine that any claim, defence, counterclaim, cross-claim, defence to counterclaim or defence to cross-claim is manifestly outside the jurisdiction of the Arbitral Tribunal, or is inadmissible or manifestly without merit; and where appropriate to issue an order or award to that effect.”

Role of Tribunal Secretaries

Article 14A clarifies and limits the role of the Tribunal Secretaries.  Although, “an Arbitral Tribunal may obtain assistance from a tribunal secretary in relation to an arbitration,” “[u]nder no circumstances may an Arbitral Tribunal delegate its decision-making function to a tribunal secretary.” Further, “[a]ll tasks carried out by a tribunal secretary shall be carried out on behalf of, and under the supervision of, the Arbitral Tribunal which shall retain its responsibility to ensure that all tasks are performed to the standard required by the LCIA Rules.” Finally, “[a]n Arbitral Tribunal may only obtain assistance from a tribunal secretary once the tribunal secretary has been approved by all parties.”

Broadening of LCIA Court and Tribunal Power to Order Consolidation and Concurrent Conduct of Arbitrations

Article 22A also now allows the Arbitral Tribunal to order consolidation of certain proceedings, without all parties consent, into a single arbitration.  The proceedings that may be consolidated are the ones commenced under the same arbitration agreement or any compatible arbitration agreement.  The proceedings have to be either between the same disputing parties or arise out of the same transaction or series of related transactions.

 Data Protection

New Article 30A recognizes significance of data protection during arbitration and provides for various mechanisms to ensure protection of the Parties’ sensitive data and information, including adoption of “any specific information security measures to protect the physical and electronic information shared in the arbitration.” This provision is particularly important in light of the LCIA’s adoption of the primacy of electronic communication and availability of virtual hearings.

CONCLUSION

LCIA’s 2020 updates adopt arbitration proceedings to challenges of Covid-19 era, which include travel restrictions and social distancing, and significantly expand application of electronic means and virtual hearings.  The Rules updates also contain important provisions concerning expeditious determination of arbitration proceedings under certain circumstances, including early determination.